January 27, 2015
Kickstarting manufacturing and small business job creation
Tom Mulcair’s speech to the Canadian Economic Club (Ottawa)
Thank you very much. Merci beaucoup.
I’m very happy to be back at the Economic Club today.
First, I would like to thank Natasha for her invitation and thank all of you for taking a few minutes out of your busy schedules today to engage with me in this important discussion.
One of the Economic Club’s roles or objectives is to provide a forum for policy makers and political actors to discuss significant problems facing our country, and to explore different solutions together.
Today will be no exception.
I’d like to focus my comments this afternoon on what I believe is far and away the most important issue facing our economy, facing our country.
When I was here with you just over a year ago, oil was at a $105 a barrel and today it’s under $50 and many suggest that we haven’t seen the bottom.
As a result, the sector has signalled that it will cut $23 billion in capital spending this year alone and with it thousands more Canadians are being thrown out of work.
But oil prices aren’t the whole story.
In the past few weeks we’ve seen massive layoffs and closures in the retail sector with announcements by Target, Mexx, Jacob, Bowring, Smart Set and Sony, throwing tens of thousands more Canadians out of work.
But the retail meltdown isn’t the whole story either.
What I want to address today is the most important economic asset any country has in the modern global economy, the engine of our prosperity for the past 70 years and if we make the right choices today, a guarantee of our prosperity for generations to come. What I am talking about of course is the economic well-being of Canada’s middle-class.
Because I believe that the best measure of a well-functioning, diversified economy is the strength of the middle class.
But the reality is in 2015 middle class families are working harder, while falling further and further behind.
And the middle class continues to pay the price for our last recession.
Today, there are 300,000 more out-of-work Canadians than before the recession,
and job creation has not kept pace with active-population growth.
The youth unemployment rate has climbed so high that, first the first time in Canadian history, the next generation will be less well-off than that of its parents. Of course, they will also inherit a massive economic, social and environmental debt.
Incomes are down, but household debt has reached record levels at 163% of disposable income.
This record level of household debt is a condition that the Bank of Canada calls, quote “a significant risk to Canada’s financial stability.”
Young families just starting out can’t find affordable, quality childcare. That hurts families and the economy.
Post-secondary education and training for our young people is being priced out of reach for far too many. Seven out of 10 working Canadians don't even have a pension. And for the first time in our country’s history, current generations will be worse off than their parents.
These are realities that millions of middle class families face along with the millions more who want to be in the middle class.
To succeed in the 21st century, Canada will need to rebuild its institutions, based on the principles of good public administration and protecting citizens.
We will need to find ways to preserve and bolster existing benefits in order to mitigate the growing inequalities that are currently threatening the sustainability of our economy and the prosperity of the middle class.
And we will need to adapt our economies to fit a model of sustainable and balanced development, based on straightforward, sensible practices like the polluter pays principle.
To ensure a thriving middle class we need a prosperous diversified economy, one that effectively absorbs shocks, such as steep drops in commodity prices and where global and domestic investment is welcomed to kick-start new opportunities and create stable full-time employment, an economy that not only leverages our strengths in traditional sectors such as resource extraction and manufacturing but seizes new opportunities as well.
Let me give you an example. As minister of the environment and sustainable development in the Quebec government, I saw first-hand the emerging markets for renewable energy.
Around the world, governments and industry leaders are investing in wind, hydro, solar and geothermal technologies. It is forecast that by 2030, $5 trillion of the $7.7 trillion invested globally in energy will be in the renewable sector. Yet due to inaction, Canada still lags far behind in investment attractiveness meaning that thousands of good paying, middle-class jobs have gone elsewhere.
That’s just not good enough.
I’ll work with industry, and the provinces and territories to ensure that Canada seizes every opportunity to reap the benefits of diversifying sectors such as renewable energy provide. If Canada is to become a true energy superpower in the 21st century we need 21st century thinking.
We need to combine manufacturing opportunities with emerging markets and technologies to diversify our economy, create good-paying Canadian jobs and tackle climate change. And looking at the immediate needs of today’s economy, I see two key areas of immediate priority:
The first is to kick-start manufacturing innovation. The second is small business, Canada’s local job creators.
Over the coming weeks and months, I will be outlining a full suite of measures to get the Canadian economy on sure footing but today I would like to announce three concrete steps that I will take to address these urgent priorities.
First, to seize current opportunities that exist in Canadian manufacturing and usher in the next era of investment and innovation, I’ll extend the accelerated capital cost allowance – scheduled to expire later this year for an additional two years.
Second, I will introduce an Innovation Tax Credit to encourage the investments in machinery, equipment and property used in innovation-boosting research and development.
If we're going to attract and compete for the manufacturing jobs of the future, we must trigger greater private sector investment in research. My plan will ensure that the companies that are developing innovative products and jobs of the future get the support they need.
These two initiatives signal to manufacturers that their investments in new equipment, innovation, R&D and stable full-time employment is a priority now and into the future.
Third, we’ll provide immediate and permanent help for Canada’s hard working small business people who are the backbone of local communities and the creators of 80% of all new jobs in this country.
We’ll start by cutting the small business tax rate from 11 to 10 to 9%, a near 20% reduction.
With this one practical measure, small businesses can better weather the current economic climate, hire more employees and help their local communities prosper for years to come.
Over the coming months, the NDP will offer full series of measures to Canadians to help promote economic growth and put Canada on the right track.
Today, I will mention three key aspects of our economic vision.
First, an NDP government would retain effective measures that help the Canadian manufacturing and transformation sectors and would extend the accelerated capital cost allowance for an additional two years.
Second, the NDP would implement an Innovation Tax Credit to encourage investments in machinery, equipment and property used in innovation-boosting research and development.
Third, we would provide immediate and permanent assistance to our SMEs by progressively reducing their tax rate by one fifth, from 11 to 10 to 9%.
Small and medium-sized businesses create the most jobs in Canada and its time we help them out.
These practical steps are just the beginning of what we can do rightaway to get the economy and the middle class on track.
Let me conclude by saying that my focus on the middle class stems from my upbringing. It is a fundamental part of who I am.
My family story is that of millions of Canadian families. Growing up the second oldest of 10 kids we had to work for everything we had. It wasn’t easy. We worked hard, played by the rules and lived within our means. We learned the importance of looking out for one another, sticking together, of community, of generosity.
These are the values that guided me throughout my thirty five years of public life and my time as a cabinet minister in the Government of Quebec. And these are the values that will guide me as Prime Minister.
My family pursued the middle class dream, an undertaking that has become more and more difficult for too many families. But it doesn't have to be this way.
I believe in growing the economy through prudent, strategic investments and sound fiscal policy. Policies that attract investment and stimulate the creation of stable, full-time jobs.
For example, the New Democratic Party has an open and progressive approach to international trade. We support the free trade agreement with South Korea, and the agreement in principle with Europe.
The goal is to put the emphasis back on sustainable economic growth. Growth that will help not only today’s middle class, but our children and grandchildren. This means building a diversified economy that focuses on the creation of value-added jobs.
When we consider recent events – the job losses, the closures, the withdrawing of investment, and skyrocketing of household debt I believe that the focus of our response must be on the hard-working families who feel the effects of these events day-in and day-out.
Their struggles will always guide my priorities.
With strategic investments and a concrete plan, we can provide the squeezed middle class with a stronger economy and better shock absorbers to ensure they weather the storm in the coming months and years ahead.
And while there is much to concern middle class families I have tremendous optimism. I see many opportunities that can ensure Canada rebounds faster and stronger.
What is needed is the will and the plan to seize them.
And friends, that’s my offer to Canadians in this year’s election.
A choice between change and more of the same, between a concrete plan or more improvisation, between a middle class that is stronger or one that falls further behind.
That is the NDP’s offer this October. The choice has never been clearer. And there isn’t a moment to waste. The middle class in Canada is counting on action and we’ll deliver it.
Thank you. Merci beaucoup.